TAXN 22

Business tax imposed on

persons, entities, or
transactions specified
under Sections 116 to 127
of the National Internal
Revenue Code of 1997, as
amended, and as
required under special
law.

- CREATE LAW -
 Percentage Taxes

1. Persons, who are not VAT-registered, who sell goods, properties or

services, whose annual gross sales and/or receipts do not exceed three
million pesos (Php3,000,000.00) and are exempt from value-added tax
(VAT) under Section 109 (BB) of the National Internal Revenue Code, as
amended by Republic Act (RA) No. 10963.
2. Persons who lease residential units where the monthly rental per unit
exceeds fifteen thousand pesos (Php15,000.00) but the aggregate of such
rentals of the lessor during the year does not exceed three million pesos
(Php3,000,000.00)
 Percentage Taxes
3. Persons engaged in the following industries/transactions:
Cars for rent or hire driven by the lessee, transportation contractors,
including persons who transport passengers for hire, and other domestic
carriers by land for the transport of passengers (except owners of bancas
and owners of animal-drawn two-wheeled vehicle) and keepers of garages
International air/shipping carriers doing business in the Philippines on
their gross receipts derived from transport of cargo from the Philippines to
another country
Franchise grantees of –
a. Radio and/or television broadcasting companies whose annual gross
receipts for the preceding year do not exceed Php 10,000,000.00 and
did not opt to register as VAT taxpayers, and
b. Gas and water utilities.
 Percentage Taxes

Overseas dispatch, message or conversation transmitted from the Philippines by

telephone, telegraph, tele-writer exchange, wireless and other communication
equipment services, except those transmitted by:
The Philippine Government or any of its political subdivisions or instrumentalities;
Diplomatic services;
Public international organizations or any of their agencies based in the Philippines
enjoying privileges, exemptions and immunities which the Philippine Government is
committed to recognize pursuant to international agreement; and
News services for messages which deal exclusively with the collection of news items
for, or the dissemination of news item through, public press, radio or television
broadcasting or a newsticker service furnishing a general news service similar to
that of the public press.
 Percentage Taxes
Banks, non-bank financial intermediaries performing quasi-banking functions
Other non-bank financial intermediaries (including pawnshops as clarified
under Revenue Regulations [RR] No. 10 – 2004)
Person, company or corporation (except purely cooperative companies or
associations) doing life insurance business in the Philippines
Fire, marine or miscellaneous agents of foreign insurance companies
Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing
exhibitions, professional basketball games, Jai-Alai and racetracks, including
videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music
lounges as clarified under Revenue Memorandum Circular (RMC) No. 18 –
2010
Winnings or 'dividends' in horse races
Stock transactions tax
 1% of Gross Selling Price

(including excise tax if any)

Tax

net of:
Base &

sales return and allowances

Rate

sales discounts
(at the time of sale)
1% from July 2020 June 2023 only


Illustrations
Pls refer to your book page 16.2
 Filing
2551 Q
Journal Entries
Quarterly 25 days after end of each
quarter
Percentage Tax* XXX
Cash XXX 2552 (for stock transactions tax)

;* or any account title

5 days if stock is traded
30 days if IPO
5 days if SPO


Franchise Tax
2% of Gross collection (Gas and Water)

3% of Gross collection (radio and broadcasting

provided gross receipts did not exceed 10M,
otherwise, subject to VAT)

All the rest, subject to VAT

 Oversees
Communications

Tax
10% on the amount paid for overseas dispatch,
message or conversation transmitted from the
Ph to other country by telephone, telegraph,
telewriter, etc. Except govt, diplomatic service,
International organization and news service.

20 days after end of each quarter

 Gross receipts:

Interest, commissions and discounts

Tax on
Maturity is <=5 years 5%
Maturity is >5 years 1%

banks and Dividends and equity shares

non-banks
and net income of subs 0%

Royalties, rental of properties,

profit from exchange 7%

Net trading gain on FC, debt

securities, derivatives etc. 7%
 Gross receipts:

Tax on other lending/financial leasing

non-bank Maturity is <=5 years 5%

financial
Maturity is >5 years 1%

intermediaries Other income in general 5%

 Tax on Insurance Companies
Gross receipts:

Insurance collected 2%

Tax on Agents of foreign

Insurance Companies
Gross receipts:

Insurance collected 5%
 Amusement Tax

Cockpits cabarets, night or day clubs 18%

Boxing exhibitions 10%

World or Oriental Championships in any division is at stake with at least one of the contenders for World or
Oriental Championship is a citizen[s] of the Philippines and said exhibitions are promoted by a citizen/s of
the Philippines or by a corporation or association at least sixty percent (60%) of the capital of which is
owned by such citizens;

Professional basketball games 15%

which in lieu of all other percentage taxes of whatever nature and description

Jai-Alai and racetracks 30%

** filed and paid within 20 days after end of

every quarter
Tax on Winnings

Winnings or dividends of person in

horse races or jai-alai 10%

Winnings from double forecast

quinella and trifecta bets 4%

Winnings of owners of winning horses 10%

** the tax is withheld by the operator/manager

of horse race or jai-alai

** filed and paid within 20 days from date withheld

Stock transactions Tax

Initial Public Offering

Control up to 25% 4%
25% to 33 1/3 % 2%
over 33 1/3 % 1%

Secondary Offering 6/10 of 1% or 0.006 of Selling Price

** tax is paid by the seller (withheld)

** filed and paid within 5 banking days IPO 30 days oif secondary